U.S. Manufacturing Activity Continues to Expand

A gauge of U.S. factory activity rose in October, a sign the manufacturing sector could be stabilizing after two years of challenging conditions.

The Institute for Supply Management on Tuesday said its manufacturing index rose to 51.9 in October from 51.5 in September. A reading above 50 indicates that factory activity is growing, while a reading under 50 signals contraction.

Economists surveyed by The Wall Street Journal had expected an October reading of 52.0.

The index for new orders dropped, but those for production and employment both rose.

U.S. companies have been slow to invest in new equipment and structures, especially in the energy industry. But the softness has extended to other sectors as well, such as transport and residential construction, dragging down overall economic growth.

A separate measure of manufacturing-sector activity from private data provider Markit showed its manufacturing purchasing managers index rebounded in October to 53.4, its highest level in a year, with strength in new orders and output. That follows a reading of 51.5 in September.

Write to Anna Louie Sussman at anna.sussman@wsj.com